Full article

Retail sales of licensed merchandise in the U.S. and Canada grew X.X% in 2011, to $XX.XX billion from $XX.XX billion in 2010, according to THE LICENSING LETTER'S 2011 Annual Licensing Business Survey.

This is the first time since 2005 that the licensing business has seen year-on-year gains, and the first time in several years that the rate of growth for the licensing business has outperformed the rate of growth for retail sales overall. Most estimates put retail sales growth in the U.S. in 2011 at about X%-X.X%.

Nearly all property types experienced increases in 2011, ranging from XX.X% for properties originating in the digital space (videogames, virtual worlds, mobile apps, etc.), to a modest X.X% for art, artists and museums.

Growth in digital was driven both by the entry of new digital-origin properties and by the fact that these types of licenses became commercially viable for the first time in 2011. Properties such as Angry Birds and Moshi Monsters generated as much buzz (and sales, at least for Angry Birds in the U.S./Canada; Moshi Monsters is just building awareness in those markets, but is already established in the UK) as any license last year.

One exception to the rosy picture is the entertainment/character sector, which declined X.X%. Many of the leading studio licensors are experiencing internal turmoil, some long-performing entertainment properties have been showing weakness of late, and new properties are having a hard time breaking through.

In addition, some of the categories that are experiencing growth on the entertainment/character side, such as themed entertainment, content distribution, and services, are not included in the merchandise retail sales data tracked in this survey.

Of course, not every entertainment/character property performed poorly in 2011; some of the standouts included Star Wars, Disney Princess and other key Disney brands; and Hello Kitty.

All of the other big property sectors, outside of entertainment/character, witnessed healthy gains in 2011: X.X% for fashion, X.X% for corporate trademarks and brands, and X.X% for sports.

In terms of product categories, the positive growth trends extended to almost all sectors. Among the strongest were consumer electronics, with X.X% growth in 2011 over 2010; hardware and paint with X.X%; health and beauty with X.X% (led by nail polish and cosmetics at X.X%); and eyewear with X.X%. The biggest category for licensing overall--apparel, with a market share of XX% in 2011--saw a strong X.X% gain over 2010.

The only product categories for which retail sales of licensed merchandise declined in 2011 are:

* Videogames/software, down X.X%, according to the TLL survey. The decline was due both to softness in the videogame category overall--sales of physical games were down X% in 2011, according to the NPD Group--as well as the poor results of many entertainment/character licenses, particularly movies.

In fact, several videogame/software companies, most recently THQ, are moving away from movie and other entertainment licenses. But others continue to do other types of licenses. Active areas include sports games (ranging from the major leagues and martial arts to bowling, volleyball, and swimming), as well as titles tied to children's books and traditional toy brands.

* Traditional toys/games, down X.X%, according to TLL. The toy industry as a whole was down X% in 2011, per NPD. Aside from established brands such as Star Wars and Disney Princess, and a few up-and-coming properties such as Monster Jam and Angry Birds, licensed products had a hard time gaining shelf space or breaking through with consumers.

* Stationery/paper, down X.X%, we estimate. While some properties, including several artists, had a strong year in this category, it has been a challenging sector. This is in part due to competition from digital alternatives, especially for items such as greeting cards, stationery, scrapbooks, photo albums, and crafting papers. On the other hand, some licensors say posters, calendars, and school supplies were bright spots in this otherwise weak category.

Respondents to the survey are keeping their positive outlook into 2012: XX% feel retail sales of licensed merchandise will grow in 2012. The average increase cited by those predicting an up year is an optimistic X.XX%.

METHODOLOGY: TLL's estimates of the size of the licensing business are based on its online survey of licensors, licensees, agents, and consultants, conducted in January 2012; interviews with licensing executives for this survey and throughout the year; a review of third-party research of overall category size and retail sales trends; annual reports and other corporate information.

RETAIL SALES OF LICENSED MERCHANDISE, 2010-2011,
BY PROPERTY TYPE, U.S. AND CANADA